Babylon, the leader in the restaking sector, has officially registered its foundation account tonight, signaling that its Token Generation Event (TGE) is imminent. Below is a detailed analysis of the Babylon project and the value of participating in its airdrop.

1. Project Overview: Strong Team and Prestigious Investors

1.1 Founding Team

The founding team of Babylon has a strong academic background. While there are several Chinese team members, the key management personnel are primarily from overseas. Here’s a brief introduction to the core founding members and management team:

• David Tse (Co-founder): A distinguished academic, he is a member of the U.S. National Academy of Engineering and a professor at the University of Chicago and Stanford University.
• Mingchao (Fisher) Yu (CTO & Co-founder): Previously a lecturer at the Australian National University, he later served as a senior research engineer and principal engineer at Dolby Laboratories.
• Xinshu Dong (Chief Strategy Officer): Co-founder of RockX and Zilliqa, as well as a technical partner at renowned VC firm IOSG Ventures.
• Sankha Banerjee (Chief Protocol Economist): A graduate of MIT, he previously worked at Nibiru.
• Spyros Kekos (Community Lead): Formerly the community lead at cryptocurrency exchange Gate.io.

Beyond these key members, a closer examination of the project’s management team reveals that most core personnel have at least 3–5 years of relevant experience in their respective positions or have worked at well-known projects and exchanges. This indicates that Babylon’s management team possesses substantial blockchain industry experience, ensuring that the project’s operations are mature and aligned with industry developments.

Furthermore, David Tse’s status as an academician and his extensive research background instill strong confidence in the project’s technical capabilities. Additionally, several core team members have an investment background, meaning that Babylon has well-established investment channels. This is directly reflected in its financing status and investor lineup.

1.2 Investment and Financing

Looking at the funding rounds, Babylon took a full year to progress from the seed round to Series A. However, the pace and scale of fundraising significantly accelerated from Series A to the mainnet launch, indicating that the project dedicated substantial effort to testing its network during the early development phase before proceeding with the next funding round. The last financing round in May 2024 raised a staggering $70 million, bringing the total funding amount to $96 million—a highly impressive figure.

In terms of investors, Babylon boasts an exceptionally strong and diverse investment lineup.

As shown in the image above, in addition to top-tier traditional VC firms like Paradigm and Polychain, the project has also secured investments from leading exchanges, including Binance and OKX.

Among individual investors, notable figures include:

• Ajit Tripathi (Former Fintech Partner at ConsenSys)
• Ryan Fang (Co-founder of Ankr)
• Jia Yaoqi (Founder of AltLayer)

The investment background is undeniably prestigious, encompassing a wide range of fund types and investor profiles. This ensures that the project has ample resources at its disposal.

In summary, Babylon places significant emphasis on team experience and technical expertise while maintaining a well-balanced and comprehensive structure. This strategic yet pragmatic team configuration ensures sustainable operations and long-term growth. From a financing perspective, the presence of VCs from various backgrounds provides the project with extensive resources. Not only does this signify strong confidence in Babylon’s market positioning, but it also suggests substantial growth potential for the project in the future.

2. Project Advantages: Leveraging PoW Security to Unlock BTC Liquidity

There have been numerous analyses of restaking and the Babylon project. Summarizing the key insights, there are several widely recognized advantages of Babylon, which also form the core strengths of the project.

2.1 Activating Idle BTC Assets to Foster BTC Ecosystem Growth

BTC is BTC, and cryptocurrency is cryptocurrency. As BTC accounts for more than half of the total market capitalization in the crypto space, the question of how to make BTC assets more liquid and functional has long been a challenge.

Historically, BTC holders have prioritized security above all else, making it difficult to move BTC from their wallets. Under custodial models, private key leaks can lead to catastrophic asset losses—an outcome no BTC holder is willing to risk. As a result, many BTC holders prefer to let their assets sit idle rather than expose them to even minimal risk.

Additionally, BTC’s native blockchain lacks Turing completeness, meaning it cannot support smart contracts like Ethereum, which limits its ability to securely interact with other chains. Due to this ingrained perception and the technical constraints of the BTC network, the asset value of BTC has long been disproportionate to its actual utility.

Babylon directly addresses this pain point by introducing a trustless, self-custodial staking protocol. In simple terms, this solution allows users to stake BTC securely while retaining full control over their assets. The staking mechanism leverages the security of Bitcoin’s Proof-of-Work (PoW) consensus to enhance the security of various Proof-of-Stake (PoS) chains, creating a mutually beneficial ecosystem. Babylon’s proprietary technology plays a crucial role in achieving this, which is one of the key reasons for its widespread market recognition.

2.2 Bitcoin Timestamps and Staking Protocol: The Two Pillars of Babylon’s Technology

For PoS chains, particularly those utilizing Byzantine Fault Tolerance (BFT), two-thirds majority voting is typically required to finalize blocks. While most PoS chains implement slashing mechanisms to deter fork-based attacks, these attacks are still difficult to fully prevent without additional trust sources.

To mitigate this, some PoS chains tie security directly to stakeholder incentives, leading to long unbonding periods for staked assets. Babylon’s solution is to anchor PoS chain checkpoint validation to the Bitcoin network. Due to the properties of PoW, if an attacker attempts a fork attack, the forked chain will have a later timestamp on the Bitcoin network, allowing the Bitcoin timestamp to effectively prevent long-range attacks.

A simple analogy: The Bitcoin network acts as an official race record system. Every runner’s finishing time is logged immutably. If a runner tries to alter their finishing time, the Bitcoin network will detect the discrepancy and reject the fraudulent record. To forcibly alter it, one would need to generate a fork longer than the Bitcoin network itself, which is nearly impossible due to the immense cost.

Another advantage of this approach is that it significantly reduces the unstaking period for PoS chains while also enhancing censorship resistance.

Remote Staking and Bitcoin Covenant Emulation

Babylon employs a remote staking model, where staked BTC is locked in a contract on the Bitcoin network. If a staker violates the rules of a PoS chain, the staked BTC can be slashed directly on the Bitcoin network.

The primary technical implementation of this mechanism is achieved through Bitcoin covenant emulation, a method based on improvements to Bitcoin’s UTXO model. While the technical details are complex, Babylon’s official documentation outlines the core principles of this approach.

As described in the official documentation, the Bitcoin covenant-based mechanism ensures the enforcement of BTC staking withdrawals and penalty executions, maintaining the integrity and security of the system.

2.3 Bridging BTC with Multiple EVM Chains to Enhance Cosmos Ecosystem Security

To some extent, Babylon is not a typical crypto asset staking solution, nor is it similar to EigenLayer’s actively validated services for security assurance. Instead, it represents an innovative use case of cross-chain staking. In reality, its security contribution to PoS chains does not rely on BTC assets themselves but rather on Bitcoin’s PoW security model.

Babylon’s cross-chain communication and security-sharing mechanisms are built on Cosmos, and its innovative approach to leveraging BTC network security greatly benefits the Cosmos ecosystem. In response, Cosmos chains are expected to actively embrace Babylon’s security-sharing innovation, ensuring that the entire ecosystem gains from its benefits.

3. Future Prospects: Significant Growth Potential, but Not Without Challenges

As the largest restaking protocol in the BTC ecosystem, Babylon currently holds a total value locked (TVL) of over $5.5 billion, with 56,000 BTC staked. However, compared to Bitcoin’s total supply of 21 million BTC, the overall participation rate is only 0.26%. If participation were to increase to just 1%, Babylon’s TVL could grow by more than 4x, indicating substantial upside potential. This growth opportunity is likely a key reason behind Babylon’s ability to secure significant funding from investors.

That said, Babylon also faces notable challenges in its expansion:

Adoption by PoS chains and participation from BTC holders requires ongoing education and behavioral shifts. BTC holders—especially large-scale investors—tend to be highly cautious before committing their assets.

The rise of Bitcoin ETFs and corporate Bitcoin reserves could shift BTC ownership towards institutions and large holders. As Bitcoin becomes increasingly concentrated in institutional hands, Babylon must develop compelling incentives to attract these entities. This will require continued innovation in its protocol and strategic operational adjustments.

4. Airdrop Opportunities and Risk Analysis: Low-Risk Participation with Potential Rewards

From the previous analysis, it’s clear that Babylon stands out in terms of technology, funding, and team strength. Its long-term growth potential remains significant, and as the leader in the BTC restaking sector, its TGE (Token Generation Event) is highly anticipated.

For airdrop hunters, the key question is whether Babylon’s airdrop offers worthwhile participation. The following section will provide further data-driven analysis to evaluate the potential value of Babylon’s airdrop.

4.1 Testnet: Officially No Incentives, But Zero-Cost Participation May Be Worth Considering

On January 8, Babylon launched Phase 2 of its testnet, with official documentation repeatedly emphasizing that the testnet carries no incentives. However, since participation comes at zero cost, users may still want to engage to avoid missing out. Based on estimated airdrop allocations, if Babylon later distributes rewards, early testnet participants could potentially receive $300–$500 per person.

4.2 Mainnet Points: Decent Annualized Yield, Suitable for Idle Funds

Currently, the only way to earn points for a potential airdrop is through associated projects that distribute points, which can later be exchanged for airdrop tokens. The main staking projects include Lorenzo and Solv, with Lorenzo accounting for 40% of total staked assets. Lorenzo is also a highly funded project that has yet to issue its token.

According to Dune Analytics, the total points issued currently stand at 130 million, increasing by approximately 1 million per day. If TGE occurs within the next month, the total points issued would reach an estimated 160 million.

4.3 Points Valuation

Method 1: Daily points issuance divided by total staked BTC (Approx. 17.92 points per BTC per day)

Method 2: Time-based distribution of total supply (Approx. 38.35 points per BTC per day)

Method 3: Ratio of protocol-earned Babylon points to total BTC staked (Approx. 31.53 points per BTC per day)

From these calculations, the daily issuance per BTC staked is estimated at 17.92, 38.35, and 31.53 points, respectively.

4.4 Estimated Returns

Given Babylon’s high staked value and leading position, a conservative fully diluted valuation (FDV) at TGE is estimated to be $3–5 billion. For reference, Solv Protocol allocated 7.65% of its total supply for airdrops, and as Babylon seeks to solidify its position as the sector leader, an estimated 10% airdrop allocation (valued at $300–500 million) seems reasonable. (Note: This is a conservative estimate due to current market conditions; under normal circumstances, the valuation could range from $5–10 billion.)

Table 1: Per-Point Value Estimation

Table 2: Monthly BTC Staking Yield Comparison (BTC Price at the Time of Writing: $98,522)

Overall Yield Estimation: Based on calculations, the current monthly staking yield ranges from 1.02% to 3.66%, making it an attractive option for those with idle BTC.

Key Airdrop Risks:

Unclear timeline: There is no confirmed end date for the airdrop program.

Uncertain rules: The final airdrop allocation criteria remain unspecified, posing potential uncertainty.

Final Thoughts

As a well-funded project backed by major VC and exchange-affiliated funds, Babylon benefits from a high industry ceiling and a mature operational approach. Current progress appears smooth, with strong growth potential, positioning it for high market interest post-TGE.

Given the limited information available, participating at this stage still presents a reasonable risk-reward tradeoff, and users may choose to engage based on their personal risk tolerance and investment preferences.

Disclaimer:

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